As more people used digital wallets for peer-to-peer money transfers during the pandemic, the more they complained about the services — especially when the third round of stimulus checks hit bank accounts earlier this year.
The rise in dissatisfaction also opened the door for scammers.
The Consumer Financial Protection Bureau received 4,406 complaints about digital wallets in the first six months of 2021, according to the bureau’s database. In the preceding four years, consumers filed 1,625 digital wallet complaints on average to the government watchdog.
“A lot of people are complaining about how difficult it is to get customer service, and they can’t figure it out, and they are getting really frustrated,” said Ed Mierzwinski, senior director of the federal consumer program for the consumer advocacy U.S. PIRG, which did a similar analysis of CFPB complaints through April.
The number of complaints spiked in March and April of this year, just as the federal government started distributing the $1,400-per-person stimulus payments as part of the $1.9 billion American Rescue Plan.
That’s also when PayPal — the largest digital wallet company and owner of Venmo — noted that the words ‘stimulus’ and ‘stimmy’ were the top trending words in payment notes for peer-to-peer transactions, the company told Yahoo Money
. Many of the payments included notes like family support, paying loans/bills, and paying taxes.
PayPal has received more than 5,700 complaints on the CFPB database since 2017 — the most out of any digital wallet company — with many of the gripes coming as usage of peer-to-peer payments increased in the last year among digital wallet novices.
“We’re seeing a continued rise in ‘silver tech’ or boomers who are shifting to e-commerce for the first time in the pandemic out of necessity,” said Amanda Coffee, senior manager of global corporate communications at PayPal.
The number of businesses accepting digital payments has also skyrocketed during the pandemic. Last year, PayPal added more than 5 million small to medium-sized businesses to its platform.
“On top of the approximately 73 million users added last year, at our current pace, we’ll add more new users between last year and this year than we did in 2016, ’17, ’18 and ’19 combined,” said John Rainey, PayPal’s CFO, in the company’s first-quarter earnings call.
With the increase of usage, so is the risk for scams, especially when the government is paying out money.
The three most common complaints involving digital wallets this year found are problems managing, opening or closing accounts; problems with fraud or scams; and problems with transactions, including unauthorized transactions, according to PIRG’s analysis.
According to many digital wallet help pages, an unauthorized transaction is a payment made without your knowledge or permission. If you press the “ok” or “send” button on your app, but don’t receive the service promised or find out payment was to the wrong person, that is a scam situation.
But because you technically said “yes” to the transaction, you are liable for the money taken from your account.
In recent years Zelle has spent money spreading awareness of scams and partnered with nonprofits to educate people on the risks of sending money to strangers. But the fraudsters are often a step ahead.
“The scammers circulate on social networks, and they know that consumers are upset with the customer service at any of these apps,” Mierzwinski said. “So the scammers will say, here’s a hotline for an app, and guess what, there are scammers pretending to be a hotline.”